Can OPEC stabilize oil markets?

OPEC ministers meeting on Thursday will discuss market conditions, demand and supply as well as how to stabilize oil markets.

OPEC ministers meeting on Thursday will discuss market conditions, demand and supply as well as how to stabilize oil markets, state Kuwait News Agency quoted Oil Minister Bakhit al-Rashidi as saying on late on Tuesday. OPEC will meet on Thursday in Vienna to decide on future strategies for the oil market, followed by talks with allies such as Russia on Friday.

Recently, a study by Rystad Energy predicts that the oil price will be highly volatile going forward, but also that a swing producer can stabilize the market if the right heuristics are applied. Can OPEC stabilize the oil market? Seems it can do to some extent. OPEC Countries use quotas to stabilize the market but events popping up spawn fears of over oil supply disruptions affecting oil prices. Fluctuations in oil prices show that OPEC and its non-OPEC allies must take a 'collective decision' to balance the global oil markets. Leaving the market to its own devices with no clarity or no collective decision to balance the market is unhealthy.

Recent erratic behaviour of oil prices, mainly due to looming prospect of potential oversupply in world oil markets, is expected to stabilize on getting clarity on the quantum of lowered output coming out of a consensus that is expected at the meeting of OPEC and its allies in Vienna on Thursday and Friday. However, in case of the required reduction, analysts estimate in excess of 1.4m barrels a day, in output is not agreed upon the uncertainties on the supply side will remain. Worst scenario will be a failure to secure any kind of supply deal that lead to a further fall in oil prices.